You can now find a summary of my ongoing research on MLM top earners lists on a dedicated page: MLM Top Earners. You can find the page link up on the navigation bar between “About MLM Analyst” and “Contact MLM Analyst.”
I recently finished a post on why you should be nervous about MLM companies that release distributor earnings. I finished that post suggesting that if your MLM company shows some distributors with massive monthly income numbers, there’s a great chance that its compensation program is unfairly top-heavy.
What makes a top-heavy MLM comp plan imbalanced & unfair? If you aren’t one of a few dozen of those top earners you may never see a decent income no matter how hard you work at it. Wouldn’t you rather be part of an organization that gives a fair chance for everyone to prosper?
MLM comp plans can be pretty complex and in the near future I’ll do some more detailed comparisons. But for now, bear with my over-simplifications and let’s graphically compare a top-heavy comp plan to a more balanced comp plan.
Comparing MLM Compensation Models
…of course the plan would need to be complex enough that the rank-and-file members wouldn’t understand that they just got jacked…
OK, yes, I realize I’m exaggerating a bit on both sides. But I’m trying to illustrate an important point (that, and I don’t have all day to make graphics, I have a business to run). At least you get the picture, right? Which one would you want to belong to; the one that lets a few dozen people make a few extra million per year at the expense of everyone else who is working hard to support them, or the plan that spreads those millions around? Wouldn’t an ideal plan be easy on initial participants, rewarding to the middle-class distributors and still very motivating to the top leaders?
Look at it this way. What if you were starting an MLM company and you wanted to poach a few huge distributor organizations? I’ll bet you’d be tempted to implement a top-heavy plan that convinces some top guys to move their groups to you. Of course the plan would need to be complex enough that the rank-and-file members wouldn’t understand that they just got jacked. Are you sure you understand your network marketing company’s compensation plan?
…go ahead and milk that warm fuzzy feeling for all it’s worth. It’s likely to be the highest compensation you ever see…
So, let’s go back to the topic of “top earners” and think about all of those mid-to-low-level distributors that are so excited to show off the fact that their upline leader is on top of the list. Pal (yes, I’m speaking to you, confused MonaVie guy), if you’re proud that some top earners list shows your guys at the top, go ahead and milk that warm fuzzy feeling for all it’s worth. It’s likely to be the highest compensation you ever see.
Everyone else who actually understood this argument should be asking themselves, “How do I identify the best possible network marketing company to join?” Lucky for you there are quite a few equitable MLM companies. To identify which one is right for you, you’d want to find out about their upline support, product quality, company support, compensation plan, cost, etc. And if the business opportunity was your primary concern, you’d definitely want to look at what companies are growing – and on top of that, which are experiencing momentum? Those are the ones who probably got the overall mix “right.”
As always, there’s more to come…. And, please feel free to comment anytime if you agree or disagree or if you have any questions or subjects you’d like me to cover in the future.
You may have noticed a response to my previous post from Ted Nuyten, author of the MLM Top 500Earners List. I appreciated his comments and thought they were insightful.
This was the bulk of his response:
“The MLM 500 rankings is a list which has approx. 30% of all Top Earners listed. So if you miss people that is the only reason. It’s a lot of work, but our list grows every day. We are independent of which direct selling companies may exist. Some companies and distributors however are more willing to share their top earnings income then others.”
Some Lingering Questions
Those are fair disclaimers, but they leave me with some additional questions. I’ve invited Mr. Nuyten to to comment again on the following questions.
What are the origins of the list and what relationships caused you to initially focus so heavily on 1 or 2 companies in particular? Specifically, is there a business relationship? Are you, or have you been a distributor for one of the 2? Honestly, the way this list was launched makes it looks suspect.
I’ve contacted my sources at some major MLM companies and they claim they were never approached with the opportunity to contribute or respond to the list before (or even after) it was published. That seems to intentionally create an uneven playing field which, again, raises some questions about the list’s purpose and objectivity.
An Alternate Approach
I wonder how the list would look if some additional research had been done before it was published. I’m guessing that a number of MLM companies would have been reluctant to reveal their earnings numbers at all and others would have been tempted to disclose artificial numbers, either to build up their perceived success or to reduce the poaching of their top distributors.
Couldn’t the first concern (privacy) be countered by allowing a company to disclose top earners’ payouts without actually naming the distributor, thus protecting their privacy? Couldn’t the second concern (accuracy) be handled by requiring proof of payments that would be averaged over time.
If that’s not possible, how about providing a confidence indicator for each line? A more useful list might show which entries were based on 1) verified company records (including records over time), 2) unverified company reports (no records to back up the claims), 3) distributor self-reports, or 4) hearsay/rumors.
A Completely Different Approach
While looking at an accurate static list of earners might be interesting, indicators of growth might be more important to distributors wanting to compare which MLM companies offer them the greatest potential future. A lot of companies say things like, “pre-launch” or “ground floor” or “look how much we currently make/pay.”
But that doesn’t mean they are growing, let alone going viral. What if they are actually shrinking? I have some interesting ideas for estimating growth trends of network marketing companies that I’ll be fleshing out in future posts. Stay tuned…
This post explores the motivations of MLM companies that publish their distributor earnings numbers.
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